Antonio Urcelay, Chief Executive Officer, Toys"R"Us, Inc., stated, "The results for the first quarter of fiscal 2015 demonstrate the steady progress we are making in executing our "TRU Transformation" strategy. During the quarter, we delivered a strong increase in Adjusted EBITDA, which benefited from significant SG&A savings. While the U.S. experienced softness in comparable store net sales, our U.S. operating performance improved significantly, almost tripling the prior year’s operating earnings. Internationally we continued our positive comparable store net sales trend, where we experienced particular strength in China and Southeast Asia."

Mr. Urcelay continued, "We are proud of the success of our "Fit for Growth" initiative and we would like to thank our employees for their incredible effort on this project. While we will continue to benefit from the savings contributed in future quarters, the heavy lifting around organizational change is largely complete."

First Quarter Highlights

Net sales were $2,325 million, a decrease of $154 million compared to the prior year period. Excluding the $131 million negative impact of foreign currency translation, net sales declined $23 million or 0.9%. The decline was predominantly due to a decrease in Domestic comparable store net sales, partially offset by International segment increases in net sales from new locations and comparable store net sales.

International comparable store net sales were up 1.2% primarily driven by increases in the learning and core toy categories, partially offset by a decrease in our entertainment category (which includes electronics, video game hardware and software). Domestic comparable store net sales were down 2.3% primarily due to a planned decrease in promotional activity. While core toy category sales increased, we experienced declines in the baby, entertainment and seasonal categories.

Gross margin dollars were $862 million, compared to $918 million for the prior year period, a decrease of $56 million. Foreign currency translation accounted for $50 million of the decline. Gross margin, as a percentage of net sales, was 37.1% versus 37.0% in the prior year period, an increase of 0.1 percentage points. The margin improvement was primarily attributable to the Domestic segment which increased by 0.2 percentage points, to 35.9%, as a result of continued promotional discipline, with the most significant improvements in the baby and core toy categories. International segment gross margin, as a percentage of net sales, remained relatively consistent compared to the prior year period.

Selling, general and administrative expenses ("SG&A") decreased by $90 million to $827 million, compared to $917 million in the prior year period. Excluding the $49 million favorable impact from foreign currency translation, SG&A decreased by $41 million, primarily due to a $21 million decrease in payroll expenses, of which $14 million was store payroll, a $13 million reduction in advertising and promotional expenses and a $3 million decrease in occupancy costs.

Operating loss was $30 million, compared to $91 million in the prior year period. Domestic segment operating earnings improved by $40 million, primarily as a result of SG&A savings compared to the prior year period. Excluding the impact of foreign currency translation, the International segment operating performance improved by $13 million primarily as a result of an increase in gross margin dollars due to higher net sales compared to the prior year period. Corporate overhead decreased by $5 million compared to the prior year period.

Adjusted EBITDA1 was $70 million, compared to $27 million in the prior year period, an improvement of $43 million.

Net loss was $140 million, compared to $196 million in the prior year period, an improvement of $56 million.

In closing Mr. Urcelay noted, "I am particularly pleased to be transitioning my CEO responsibilities to Dave Brandon. Toys"R"Us is fortunate to have attracted an executive of Dave’s caliber. I am confident that he is the right individual to lead the company through its next stage of transformation."

Liquidity and Capital Spending

The Company ended the first quarter with total liquidity of $1.1 billion, comprised of cash and cash equivalents of $453 million and availability under committed lines of credit of $672 million. Toys"R"Us-Delaware, Inc. ended the first quarter with $638 million of liquidity, which included cash and cash equivalents of $148 million.

For the first quarter of fiscal 2015, the Company invested $43 million primarily for enhancements to information technology, store maintenance and improvements to distribution centers, compared to $39 million in the prior year period.

Further information regarding the Company’s financial performance relating to the first quarter of fiscal 2015 is presented in its quarterly report on Form 10-Q, which was filed with the Securities and Exchange Commission on June 12, 2015.

A summary of our "Fit for Growth" initiative is set forth at the end of this press release.

1A detailed description and reconciliation of EBITDA and Adjusted EBITDA for Toys"R"Us, Inc. and Toys"R"Us-Delaware, Inc., and management’s reasons for using these measures, are set forth at the end of this press release.

About Toys"R"Us, Inc.

Toys"R"Us, Inc. is the world’s leading dedicated toy and baby products retailer, offering a differentiated shopping experience through its family of brands. Merchandise is sold in 866 Toys"R"Us and Babies"R"Us stores in the United States, Puerto Rico and Guam, and in more than 730 international stores and over 240 licensed stores in 37 foreign countries and jurisdictions. In addition, it exclusively operates the legendary FAO Schwarz brand and sells extraordinary toys in the brand’s flagship store on Fifth Avenue in New York City. With its strong portfolio of e-commerce sites including Toysrus.com, Babiesrus.com and FAO.com, it provides shoppers with a broad online selection of distinctive toy and baby products. Headquartered in Wayne, NJ, Toys"R"Us, Inc. employs approximately 66,000 associates annually worldwide. The Company is committed to serving its communities as a caring and reputable neighbor through programs dedicated to keeping kids safe and helping them in times of need. Additional information about Toys"R"Us, Inc. can be found on Toysrusinc.com.

Forward-Looking Statements

All statements that are not historical facts in this press release, including statements about our beliefs or expectations, are forward-looking statements. These statements are subject to risks, uncertainties and other factors, including, among others, the seasonality of our business, competition in the retail industry, changes in our product distribution mix and distribution channels, general economic factors in the United States and other countries in which we conduct our business, consumer spending patterns, birth rates, our ability to implement our strategy including implementing initiatives for season, our ability to recognize cost savings, marketing strategies, the availability of adequate financing, access to trade credit, changes in consumer preferences, changes in employment legislation, our dependence on key vendors for our merchandise, political and other developments associated with our international operations, costs of goods that we sell, labor costs, transportation costs, domestic and international events affecting the delivery of toys and other products to our stores, product safety issues including product recalls, the existence of adverse litigation, changes in laws that impact our business, our substantial level of indebtedness and related debt-service obligations, restrictions imposed by covenants in our debt agreements and other risks, uncertainties and factors set forth in our reports and documents filed with the Securities and Exchange Commission (which reports and documents should be read in conjunction with this press release). In addition, we typically earn a disproportionate part of our annual operating earnings in the fourth quarter as a result of seasonal buying patterns and these buying patterns are difficult to forecast with certainty. We believe that all forward-looking statements are based on reasonable assumptions when made; however, we caution that it is impossible to predict actual results or outcomes or the effects of risks, uncertainties or other factors on anticipated results or outcomes and that, accordingly, one should not place undue reliance on these statements. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update these statements in light of subsequent events or developments unless required by the Securities and Exchange Commission’s rules and regulations. Actual results and outcomes may differ materially from anticipated results or outcomes discussed in any forward-looking statement.

For full release go to [http://www.toysrusinc.com/press-room/releases/financial/2015/toysrus-inc.-reports-results-for-first-quarter-2015/].

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